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Exam 17: Understanding Accounting and Financial Information

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Question 71

Multiple Choice

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Nebraska Communications is considering the purchase of a new satellite.The firm believes the satellite will help generate future earnings.In addition,the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

A) inventory valuation
B) declining balance
C) appreciation
D) depreciation

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Question 72

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One advantage of the double-entry method of bookkeeping is that it helps to identify mistakes made in recording financial transactions.

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Question 73

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Accountants record,classify,and ____________ the results of the financial information they gather.

Accounting software has proven to be especially helpful for small business owners.

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

Double-entry bookkeeping can help identify a recording error made by a bookkeeper.

Financial ratios that reflect the degree to which a firm relies on borrowed funds are called ________ ratios.

The basic earnings per share ratio does not take stock options,warrants,and preferred stock into account.

The Barkley Company has several automobiles that are used in the business.Recently,the owners were told that even though the government permits the firm to depreciate the vehicles,it is not a deductible expense on the income statement.

General expenses include office salaries,rent,and insurance.

As a recent college graduate with a degree in accounting,Jeff is helping a newly formed construction company set up its accounting system.Although the company had purchased accounting software,Jeff wants to make certain that future reports will distinguish between current liabilities and long-term liabilities.In the future,he will need to know the amount of total current liabilities in order to ____________________.

Careful consideration of the use of computers in accounting indicates that computers _____________________.

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

Accounting provides financial information that can be useful to owners,creditors,suppliers,employees,and competitors of an organization.

The firm's most valuable assets are listed at the top of its balance sheet.

A balance sheet lists assets in order of their _______________.

Earnings per share,return on sales,and return on equity are examples of:

The preparation of financial statements for people outside the firm creditors,unions,suppliers,and others) is the goal of:

An analysis of the statement of cash flows can help a firm prevent cash shortages.